Good day, and welcome to the LTC Properties 4th Quarter 2020 Analyst and Investor Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask Before management begins its presentation, please note that today's comments, including the question and answer session, may include forward looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in the LTC Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10 ks dated December 31, 2020. LTC undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances after the date of this presentation.
Please note this event is being recorded. I would now like to turn the conference over to Wendy Simpson. Please go ahead, ma'am.
Thank you, operator, and good morning to everyone. Welcome to LTC's 20 2Q4 conference call. Joining me today are Pam Kessler, Co President and Chief Financial Officer and Clint Malin, Co President and Chief Investment Officer. I'd like to start off today's call by offering our sincerest thanks for 2020 coming to an end and to again thank our operators for all they have done and keep doing to keep their patients, residents and staff safe. It continues to be a somewhat uneasy road, but our partners have shown amazing resilience and grace.
Operating through the pandemic has been different from any other cycle in the history of our industry. During the 'eight, 'nine financial crisis, certain levers could be pulled while waiting out a return to normalcy. Similar levers do not exist in this current cycle. By now, you have read news reports or heard earnings calls of other healthcare REITs citing squeezed margins, move in challenges, labor exhaustion, decreasing length of stay, home health care growth and holds on elective surgeries, all creating challenges to operators. We do believe that the industry census is close to or has hit bottom.
As the current vaccines and hopefully a third from Johnson and Johnson become more widely available and utilized, visitation opens up, communities and facilities continue to aggressively market their services and consumer confidence in these settings improves, we should see the current census stabilize and even improve. However, visibility to these events remains low, so we can't predict when that might happen or when the industry will be able to fully recover from the effect of the pandemic. Because LTC has built a conservative foundation with a strong and flexible balance sheet, we can continue to provide support to our operators if needed and take advantage of investment opportunities as they arise without placing undue strain on LTC. The need for senior care hasn't abated and states in which we have some of our highest concentration of properties are also states with the highest projected increases in the 80 plus population cohort over the next 10 years. Government support for our industry remains vitally important and our industry associations have successfully lobbied and are continuing to lobby for much needed ongoing aid and support.
With the new administration likely comes more spending on and attention to the COVID crisis. It remains to be seen how much additional aid and with it additional governmental regulation will be forthcoming and when it will arrive. We believe this extra support is necessary. Last month, the federal public health emergency declaration related to the coronavirus pandemic was extended through April 20, keeping in place the temporary 6.2% increase in federal Medicaid matching funds, including the 3 day hospital stay waiver. We believe a further extension is likely.
Additionally, a bipartisan bill was drafted to help ensure that senior care communities and facilities can maintain adequate staffing levels by allowing temporary nurse aids to retain their certification status after the COVID-nineteen emergency declaration has been lifted. In addition to the new stimulus package being negotiated, about $30,000,000,000 of prior earmarked aid remains unallocated, which will hopefully provide some incremental support to operators and the industry. Moving now to more LTC specific discussion. I'll start with rent deferrals and abatements. 4th quarter rent and mortgage interest income collections were strong at 98%.
As previously disclosed, we provided partial relief to all eligible operators in the form of reduced 2021 rent escalations. We thought it was prudent to proactively offer relief to our partners so that they had additional funds early in 2021. The rent credit is expected to have an approximate $530,000 impact on our 2021 GAAP revenue and an approximate $1,300,000 impact on our 2021 FAD. As we noted when we announced this program, our Board discussed various ways for LTC to provide support while balancing our fiduciary responsibilities to shareholders. So while FAD will be reduced, we are focusing efforts on replacing the funds with accretive transactions this year.
We will evaluate requests for additional support from operating partners as we receive them and we'll review them on a case by case basis with careful evaluation of each operator's ongoing operations, rent coverage, corporate financial health and liquidity. Pam will provide additional color shortly. Next, I'll discuss our senior lifestyle portfolio, which is currently a main area of focus for us as we work to transition the 23 communities they have operated for LTC. So far in the Q1, we have transitioned 11 assisted living communities to 2 operators. 1 operator is new to LTC and the other is an existing partner.
And our goal is to complete all SLC related transitions by the end of the second quarter. Clint will spend some time on the specifics. The M and A market remains challenging for the industry. While there are deals being done, we do not plan to relax our underwriting standards, opting instead to wait until we can complete deals that provide accretive growth for our shareholders. We do not expect to engage in any large transactions for the foreseeable future, but we are seeing interesting opportunities to participate in growth through structured finance deals with reduced risk profiles and strong returns, especially for development projects that are not dependent for success on immediate lease up or current census.
When the market begins to open up, we plan to use our considerable balance sheet to provide a wide range of regional operating partners with the financing they need to help grow their businesses. Until then, we will continue to develop new relationships and solidify existing ones so that we're ready to act when we see appropriate opportunities. Right now, we see too many uncertainties in 2020 one and we feel we cannot reasonably provide guidance at this time. Now, I'll turn the call over to Pam. Thank you, Wendy.
Total revenue declined $190,000 compared with last year's Q4. Impacting our results were abated, delinquent and deferred rent granted in 2020, a reduction in property tax revenue and lower rental revenue from the sale of the preferred care portfolio in 2020. Additionally, in the Q4 of 2019, we collected past due rent from Senior Care. Partially offsetting the decline was rent from acquisitions and completed development projects, higher rent payments from Anthem and contractual rent increases. Mortgage interest income increased $226,000 due to the funding of expansion and renovation projects.
Interest expense decreased $490,000 dollars due to lower outstanding balances and interest rates under our line of credit in the Q4 of 2020 and scheduled principal payments on our senior unsecured notes. Property tax expense decreased $809,000 primarily due to the timing of senior lifestyle property tax escrow receipts and the payment of related taxes. G and A expense increased $675,000 compared with the Q4 of 2019 due to the reimbursement of legal fees from Senior Care in the prior year period as well as the timing of certain expenditures. Income from unconsolidated joint ventures decreased $270,000 due to a dissolution in 2019 of a preferred equity investment in a joint venture offset by 2 preferred equity investments we made in 2020. During the Q4 of 2020, we recorded a $3,000,000 impairment charge associated with a memory care community in Colorado operated by Senior Lifestyle.
The impairment related to our release efforts of this property. During the Q4 of 2019, we recognized a $5,500,000 impairment charge related to the Senior Lifestyle joint venture. The 4 properties comprising the JV were sold in the Q2 of 2020. Accordingly, we received liquidation proceeds of $17,500,000 and recognized a loss on liquidation of unconsolidated joint ventures of $620,000 During the Q4 of 2020, we recognized an additional loss of $138,000 related to the final liquidation of this unconsolidated joint venture. In the Q4 of 2019, we recognized a $2,100,000 gain from insurance proceeds related to a closed skilled nursing center in Texas.
This property sustained hurricane damage and rather than rebuild it, we sold it and 2 other properties in the Q4 of 2019, resulting in a loss of $4,600,000 We provided Senior Lifestyle deferred rent in the amount of $394,000 in April of last year. While this amount has since been fully repaid, they failed to pay full rent during the Q2 of 2020. As a result, we wrote off a total of $17,700,000 of straight line rent receivable and lease incentives related to this master lease and transition rental revenue recognition to a cash basis effective July 2020. During the Q4 of 2020, we applied their letter of credit and deposits totaling $3,700,000 to accrued Q2 2020 rent receivable of 2 receivable of $125,000 with the remaining $1,100,000 to 3rd Q4 2020 rent. At December 31, 2020, Senior Lifestyle's unaccrued delinquent rent balance was 1,000,000 dollars Net income available to common shareholders for the Q4 of 2020 increased by $5,000,000 primarily resulting from acquisitions and completed development projects, rent increases, lower interest expense, the prior year's loss on sale and the 4th quarter of 2019 $5,500,000 impairment charge.
Offsets included the $3,000,000 impairment charge, decreased rent related to the preferred care property sales, abated and deferred rent net of repayment, a decrease in property tax revenue, the 2019 receipt of 2018 past due rent from Senior Care and the Q4 2019 gain from insurance proceeds. NAREIT FFO per fully diluted share is $0.78 in the Q4 of 2020 and $0.81 in the prior year 4th quarter. Excluding the gain from insurance proceeds in the Q4 of 2019, FFO per fully diluted share was 0 point 7 $6 The $0.02 increase in FFO, excluding the gain, was due to lower weighted average shares outstanding in 2020, resulting from the purchase of shares in the Q1 of 2020 under our share buyback program. Moving now to our investment activity. During the Q4 of 2020, we invested $5,000,000 under our previously announced $13,000,000 preferred equity commitment related to the development of a 2 60 7 Unit Independent and Assisted Living community in Vancouver, Washington.
Our investment earns an initial cash rate of 8% and a 12% IRR. We expect to fund our remaining $8,000,000 investment before the end of the Q1 of 2021. The preferred equity investment is accounted for as an unconsolidated joint venture. We also funded $6,300,000 in development and capital improvement projects at a weighted average rate of 8% on properties we own and paid 22,400,000 dollars in common dividends. Our 2020 FAD payout ratio was 77%.
We currently have remaining commitments under mortgage loans of $1,700,000 related to expansions and renovations on 3 properties in Michigan. We also paid $7,000,000 in regular scheduled principal payments under our senior unsecured notes. Subsequent to the end of the quarter, we borrowed $9,000,000 under our unsecured line of credit. Including this borrowing, we have $7,800,000 in cash, $501,100,000 available on our line of credit under which $98,900,000 is outstanding and $200,000,000 under our ATM program providing LTC with liquidity of approximately 709,000,000 dollars As a reminder, we have no significant long term debt maturities over the next 5 years. At the end of the 2024 quarter, our credit metrics remained favorably compared with the healthcare REIT industry average with net debt to annualized adjusted EBITDA for real estate of 4.3 times and annualized adjusted fixed charge coverage ratio of 5.3 times and a debt to enterprise value of approximately 30%.
I'll conclude my remarks with a discussion of rent deferrals and abatements. We collected 98% of 4th quarter rent and mortgage interest income, including the application of Senior Lifestyle's letter of credit and deposit. Of the rent not collected, dollars 360,000 related to rent abatements and $369,000 related to rent deferrals, net of repayments, which were provided to 3 private pay operators Clint mentioned on our previous earnings call. As I mentioned earlier, Senior Lifestyle remains delinquent in their 2020 contractual rent by $1,000,000 and they have paid no rent so far in 2021. For all of 2020, we collected 98% of contractual rent, including the application of Senior Lifestyle's letter of credit and deposits.
Of the 2% we did not collect, 0.7% was abated, 0.7% was net deferred and the remaining 0.6% was delinquent. To date so far in 2021, rent deferrals totaled 689,000 dollars net of $14,000 of deferred rent repayments. These deferrals relate to the same 3 private pay operators previously mentioned. Excluding the rent credit related to the rent escalation reduction already discussed, abated rent to date in 2021 is 360,000 We did receive rent from the operators who transitioned former SLC operated communities to date. Clint will provide more detail.
Now, I'll turn things over to Clint.
Thanks, Pam. I'll start my discussion with Senior Lifestyle. As Mindy said earlier, thus far in the Q1 of 2021, we have transitioned 11 of the 23 assisted living communities under their master lease. 6 of these communities were transferred to Randall residence, a current LTC operator and 5 were transitioned to Encore Senior Living, an operator new to us. The Randall communities, 5 of which are located in Ohio and 1 in Illinois, were transferred on January 1.
Combined, these communities contain 3 44 units. We first began working with Randall in 2019 when we acquired 2 properties in Michigan and they are now the operator of 8 LTC properties. Randall already operates properties in Ohio and Illinois and has a strong regional presence in the upper Midwest. The 6 properties were added to an existing master lease with Randall. Terms of the amended master lease were extended by 1 year with 9 years remaining.
Incremental cash rent under the amended lease is $2,700,000 for the 1st year, dollars 3,700,000 for the 2nd year and $3,900,000 for the 3rd year, escalating by 2% annually thereafter. On February 15, we transferred 5 communities, all in Wisconsin, with a total of 374 units to Encore Senior Living. Encore, founded in 2011, is a major player in the Wisconsin market, operating 34 locations before assuming these communities. The new master lease covers a 10 year period with 3 5 year renewal options. Cash rent under the lease is $2,600,000 for the 1st year, dollars 3,300,000 for the 2nd year and $3,400,000 for the 3rd year, escalating by 2% annually thereafter.
Partnering with regional operators is an important part of LTC's long term strategy and expanding our relationship with Randall, while building a new one with Encore are great examples of our ability to partner with operators who have a solid presence in their local markets and regions. There are now 12 buildings remaining in the senior lifestyle portfolio. Of those, we will be transferring 5 and selling 3 and continue to evaluate options for the remaining 4 properties. Of the 5 that will be transferred, 4 are expected to be transferred by the end of Q1 and the 5th by the end of Q2. 3 properties we intend to sell are under contract with an expected closing at the end of the second quarter, subject to timely completion of due diligence.
The 4 remaining properties have a net book value of approximately $4,500,000 1 of those properties is being closed and would be sold for an alternative use and we are evaluating our options for the remaining 3. Now I'd like to quickly update you on our most recent development projects to come online. Wetherly Court, which is located in Medford, Oregon and operated by Field Senior Living, began accepting residents last September. As of February 15, occupancy was 23%, up from 10% on October 23. The opening of this community was delayed due to the pandemic.
As a result of the delay and because as a newly opened property, Fields was not eligible for government stimulus money. We have agreed to provide them $1,300,000 of additional free rent. Ignite Medical Resort in Blue Springs, which is located in Independence, Missouri, began welcoming patients last October. At February 15, occupancy was 64%, up from 23% on October 23. Last quarter, we discussed Genesis and its disclosed doubt regarding its ability to continue as a going concern.
Genesis remains current on all of its lease obligations to LTC. They operate 6 properties for us, 5 in New Mexico and 1 in Alabama. Brookdale's master lease matures on December 31, 2021. The first renewal option is for a 4 year period. The notice period for the renewal option began on January 1, 2021 and ends on April 30, 2021.
In 2020, we extended a $4,000,000 capital commitment to Brookdale, which is available through December 31, 2021 at a 7% yield. To date, we have funded $2,000,000 of this commitment. Of note, aside from the Brookdale lease renewal, we have only one other lease that expires in 2021. The SNF operated under this lease is under contract for sale with closing expected in the Q2. Next, I'll discuss our portfolio numbers.
As a reminder, given the pandemic and the challenging environment it has created, we don't believe coverage is a good indicator of future performance at this time and are focused mainly on occupancy trends, which I'll discuss shortly. Q3 trailing 12 month EBITDARM and EBITDAR coverage using a 5% management fee was 1.14 times and 0.94 times respectively for our assisted living portfolio. These metrics are the same with and without stimulus funds as no operators allocated these funds to their P and L statements. Excluding senior lifestyle from our assisted living portfolio, EBITDARM and EBITDAR coverages would increase to 1.25 times and 1.04 times, respectively. For our skilled nursing portfolio, EBITDARM and EBITDAR coverage was 1.85x and 1.39x respectively.
Excluding stimulus funds, EBITDARM coverage was 1.58 times and EBITDAR coverage is 1.13 times. Now for some occupancy trends in our portfolio, which is as of January 31. As a reminder, for our private pay portfolio, occupancy is of that date specifically, and for our skilled portfolio, occupancy is the average for the month. Because our partners have provided January data to us on a voluntary and expedited basis, the information we are providing includes approximately 71% of our total private pay units and approximately 93% of our skilled nursing beds. Private pay occupancy was 79% at September 30, 72% at December 31st and 71% at January 31.
For skilled nursing, average monthly occupancy for the same time periods respectively was 70%, 66% 66%. We cannot predict when occupancy might begin trending upward. Regarding 2021 growth, when we are confident that we can complete deals at the right price for the right return, we will use our liquidity to provide strong regional operators with the growth capital they need. Until that time, we will focus on smaller investments with what we believe to be a better risk reward profile using vehicles such as mezzanine and preferred equity financing, while building new and existing relationships that will serve us far into the future. The preferred equity transactions we announced last quarter validate our ability to successfully transact in this market.
With that, I'll turn the call back to Wendy for her closing remarks.
Thank you, Pam and Clint. The pandemic has caused considerable disruption within our industry, and we can't determine exactly when things will begin to return to pre pandemic levels. The rollout of the COVID vaccines, a new administration that is focused on getting the country through the pandemic and an industry that is working hard to stabilize occupancy and restore consumer confidence give us hope that things are starting to turn and will continue to get better. As a company that has always viewed its operators as partners and a company that has worked hard to build a balance sheet capable of withstanding the very type of crisis through which we have been managing, LTC is ready and able to continue enhancing its portfolio, diversifying its investments and generating new opportunities to allow us to continue to serve as a growth partner of choice as a REIT done differently.
And the first question will come from Juan Sanabria with BMO. Please go ahead.
Hi, good morning. I hope everybody is doing well. Good morning, Paul. Thank you. Just wanted to dig a little deeper on Senior Lifestyles.
You've transitioned 11 out of 23. You've given us some numbers on the go forward rents on the assets that are transitioned. But I guess holistically, are you planning to keep those assets that have been transitioned, those 11 assets or are those up potentially for sale? Any and could you give us a sense of the EBITDAR that the assets holistically you're generating? Just some rough guideposts as to maybe how to think about the go forward run rate around Senior Lifestyles?
Hey, Juan, this is Clint. It's right now as we are in the midst of these transitions and a few sales, which I mentioned in my remarks, it's hard to give specific guidance right now going forward. We provided the detail to date of what's happened with the transition of the 11 buildings And we do anticipate having all transitions in sales completed by the end of Q2, which at that time we'll be able to give numbers. But as we said last quarter, I think one thing to expect is because of the impact of COVID on the performance, not only to these buildings, but in our portfolio and other buildings across the country, there's going to be a ramp up in rent over time, which you've seen in the information we provided with these 2 operators, as you can see that the rent staggers over and builds up over a 2 to 3 year period.
Can you provide maybe the total units under those 23 assets and maybe how you think about asset values on a per unit basis given that NOI is maybe not really meaningful at this point?
On a per unit metric right now, I just don't think it's a relevant number. But as far as the units, I'll get the I don't have the exact units on the 23, but I'll get them for you in just a second.
Okay. And maybe just on Genesis, can you give us a sense of what the discussions are going on what discussions may be going on there and how involved you are if that's really being run by the 2 main creditors at this point? Any insights into the discussions happening there would be helpful.
Sure. I mean, we have we're a very small part of Genesis' overall portfolio. We have had a long term relationship with Genesis and we have active discussions with them regarding performance, do property inspection. So there's a dialogue and we've been interacting with them. But again, we're a small piece of their overall portfolio.
But we're not aware of any discussions that are going on for restructuring or anything like that. So if you're asking, are we part of a discussion of a restructuring or a reorganization, we haven't been invited into if there are any of those discussions going on. And as a reminder, we restructured our lease last year, I guess 2019 now. So couple of years ago, we restructured our lease. So we don't believe that we're part of their problem.
And one thing we have seen and as we talked about on previous calls, as I mentioned, 5 of the buildings are in New Mexico and New Mexico has had Medicaid rate increases over the last couple of years with provider tax as well as just a flat Medicaid rate increase. So they've seen some substantial increase rate or increase in revenue on the Medicaid side, which has been positive for the portfolio.
Great. Just one last one for me. For Brookdale, what's the sense of whether they'll renew or not? And could you give us a sense of their coverage as to help us think about how they might be thinking about that lease option?
Yes, I'm not going to hazard a guess and if they will or will not renew. I think it's encouraging that they asked for a capital commitment last time. And they're spending it. And they're spending it. As I mentioned, we have $2,000,000 we funded today.
So I think that's a positive sign. That's a positive sign that even if Brookdale chooses not to renew this, there's been capital that's been put into the buildings, which is a positive. Performance has been strong in the Brookdale portfolio. It has come down a little bit obviously in the pandemic, but overall that portfolio has done fairly well. I think it'd probably be more of a strategic decision for Brookdale to the extent they want to renew or not.
The buildings we have with them are in multiple states. The product type we have with them is a core product in our portfolio. So it's not like we have assets that are that differ from what they operate on a larger basis in their company. So at this point, we're in contact with Brookdale and on our next call, we should know what decision they'll be making on that. I do have the number 1 on the units for Senior Lifestyle.
It's 1456 units.
The next question will come from Jordan Sadler with KeyBanc. Please go ahead.
Thank you. Good morning, everybody. So wanted to just pick off where Juan left off on Brookdale, if I could, for a second. Just can you offer up any additional color surrounding the renewal options? So renewal option 1, the window is through open through April 30th and I think that's the 4 year renewal.
That's correct. Extension. And then so what so if they don't exercise, let's say, by April 30, can you just explain options 23?
I mean, if they don't renew by other than we would go through our leasing initiative to find additional operators to take over those properties.
And they basically have to let you know. They said they have to let you know by April 30, whether or not they were doing for twelvethirty onetwenty 1.
1, Jordan, we actually moved forward the renewal time to April 30. In the previous leases, it was June 30. So we gained a couple additional months to facilitate transfers if needed.
Okay. But you're so essentially, whether or not they renew for 4 years or 5 years or 10 years or what have you, they have to let you know by April 30? That
is correct.
And then separately, as it relates to SLC, some helpful color there. Can you and I know there's quite a bit that's not yet complete. And so I understand the sensitivity there. Can we just focus in on the 11 of the 23 for a second? Maybe give us a sense of what the effective year 1 rent reduction is on those 11, if you just sort of apply the pro rata reduction?
Yes, we do Jordan, this is Pam. Since those are in a master lease with senior lifestyle, we don't allocate rent. So, however, for your model, however you want to allocate
it would
be just the best way, I guess,
if you
were Is there anything that I mean, so I mean, would a pro rata allocation not be appropriate for any reason?
Well, no, I mean, I guess you have to do some sort of proration. We're still in the process of working with Senior Life Style on what the wind down analysis looks like and what cash would be coming back to LTC in 2021 for rent and that would be the best number to use, but we're still working on that right now. So I don't have that for you, but as soon as we do, we will update
you. Okay. That's fair. And then on the remaining or others that are scheduled to be transferred, can you just run me through those dates again? It was so of the 12, you're transferring 5 and those you expect to transfer 4 of those by the end of 1Q and 1 by the end of 2Q?
Yes. And are those 2 a new operator or existing?
1 will be to an existing operator and there will be another new operator to our portfolio.
Okay. And then lastly, on the ones that are being sold, Well, actually, let me just let me ask you this. What are the coverages that the 11 were sort of underwritten to?
I would say we have we've targeted well, year 1 is a little challenging because of I mean, there's stimulus, there's COVID expenses. It's a little hard to look at year 1. We're going off to some of the lowest. It's a hard
to look at it.
But basically, we've provided coverage. We've looked sort of long term at this to be able to include coverage for these new operators to have basically to give us credit support going forward. So that's how we've looked at the re leasing aspect is setting the rents where there is coverage for the operators, but the new leases are adding into their existing lease related to these assets.
Okay. Lastly, just on Senior Lifestyle, I know they haven't paid January, February. What's the how do you guys think about I know you guys sort of fully utilize the line of credit and letter of credit and the deposits. How do we think about likelihood or ability to pay anything incremental from here?
We're hopeful there'll be additional rent coming from this. And I think from Senior Lifestyle standpoint, they look at this a little bit similar to the joint venture that we did a wind down with them previously in that they're trying to not be exposed from a liability standpoint, get a management fee and turn the additional funds over to us. As Pam mentioned, they're going through a wind down analysis right now to see what those liabilities are. So we are hopeful that there will be some additional rent once that analysis is complete by Senior Lifestyle to see what the cash position is.
Did you have additional recourse either personal or corporate?
We have the letter of credit, which was the security and some deposits, but this is, I mean, Senior Lifestyle has been cooperative in this process facilitating the transition, the sales and that's our general understanding of how this would unwound and the economics where that would reside. And to the extent there's positive cash flow from operations or from additional stimulus funds that those funds would come to LTC.
Okay. Thank you.
Thank you.
The next question will come from Connor Silversky with Berenberg. Please go ahead.
Good morning, everybody. Thanks for having me on the call today. First question, just high level and kind of asking this in reference to what's going on in the Midwest right now here with the weather. I'm just wondering if there's a kind of worst case scenario you've made for occupancy take up in the coming months and what that looks like?
I mean, I think it's a crystal ball. There's not a lot of visibility on that and that's why we haven't given guidance. So it's we would be speculation pertaining to that. But when you look at some of the positives out there regarding the vaccine rollouts, Johnson and Johnson. There were some news out today regarding Pfizer's vaccinations about the effectiveness of a single dose, as well as I guess, apparently, the studies provided that the vaccines can be stored at not the extreme temperatures that initially were indicated.
So there's some positives in regard from the vaccine rollout and the acceptance from the resident populations that hopefully provide some stability of incentives. So, but those are anecdotal and, this is unfolding as we're all watching this on a quarter by quarter basis.
Yes. Nick put out some data that showed, that layered on cases in I think it's senior housing and skilled nursing on top of the vaccine rollout. And I think that was encouraging for the industry showing a sharp decrease in new cases, coinciding with the vaccine rollout. So that is, I think, a positive. If that continues, that would mean hopefully that we can trust here in occupancy, but we're not quite willing to call that yet.
Well, Clint and I were on a call yesterday with the operator who is taking 3 or 4, 3 of the senior lifestyle buildings. And there was only one incident and I think it was an employee who had COVID. So those three buildings are COVID free. So that is a great touch point for the industry.
And then one last one for me, excuse me if I missed this. For the 12.4% of rental income maturing in 2021, part of that's Brookdale, part of that I believe is the skilled nursing facility that Clint mentioned. And then for that other operator and that other lease, can you provide any color as to what the coverage is and how conversations may be progressing on that end?
Sure. It's actually been it's more simple. It's just Brookdale and the one building we have for sale. So that's all of the renewals in 2021. It's just 2 of them.
There's a Brookdale lease and then a single asset lease, which as I mentioned is under contract for sale.
Great. Thanks for clarifying. That's all for me.
Thank you.
The next question will come from Michael Carroll with RBC Capital Markets. Please go ahead.
Yes, thanks. Clint, can you provide some color or Pam on the wind down of the senior lifestyle, I guess, portfolio. And I know you're talking about is that you're going to expect to get some rent when that's completed. I guess, what's the timing of that or what has to go into to get that completed?
Well, we were hoping it was yesterday. It's the process. You could look at any trade payables. There's they got PTO to account for as far as going through the transition. There is lease equipment, things like those.
If a new operator doesn't assume those leases, there could be termination costs, there's insurance aspects to consider. So Senior Lifestyle has been working on that. And I think at this point, we're expecting the initial look at that next week, to see where that is. So, we should have more color on our next call, regarding additional rent. And
stimulus funds.
And stimulus funds too.
Okay. And a couple of moving pieces
there. Yes.
So then, are is it should we expect that there could be some rent payments in the Q1 of 2021? Or do all these transitions and or sales need to be completed and that needs to be complete and buttoned up before you start to see some more rent coming in from the legacy Senior Lifestyle assets that they had?
There is only one asset that we have with Senior Lifestyle we will be transferring, whereby there would be a single asset, where there would be effectively support no rent in year 1 of a single asset lease, but everything else has rent associated with it.
I guess my question relates to is how long does it take to finish this? I know you said you're getting your initial look next week. I mean, should we expect that you're going to receive some rents once this winds down is completed in
the Q1? Or do we
need to see all the assets transition to new operators before they have the final numbers and are willing to kind of start paying you that backdated rent?
Our hope is that we'll see it come in on a current basis.
Okay. And then can you talk a little bit about the other operator that you disclosed that you agreed to defer rent as needed through the Q1 of 2021? I know there was about a 3 $55,000 balance at the end of the year. I mean, what's the status of that operator and was there additional rent deferred in January, February from them?
There was some additional rent deferred in January February, which Pam discussed on those numbers. So it did relate to that operator, but we were also encouraged last in Q4 that operator paid back some of the deferred rent that they had taken. They had some lease up assets in their portfolio and that's what was part of the cause. We've seen this in our portfolio, buildings that had lease up or value add as far as trying to increase census, they stalled with the pandemic. So, this is what happened to this operator.
Of the $689,000 of deferred net deferred rent, I had mentioned in the Q1 of 2021, about $560,000 related to that operator. So most of the Majority. From that majority. Yes.
Okay.
And then just last one for me, back to Senior Lifestyle real quick. And I know that there is some uncertainty on what you can provide on the breakout. I mean, could you break out what percent of the EBITDARM from that asset from that portfolio related to those 11 communities? Or is that something you can't provide?
We haven't provided that information. With COVID expenses and some stimulus funds, it's hard metric to look at, so we've not provided that information.
Okay. And could you provide it based off of let's just say the 2019 run rates of pre COVID or is that not comparable anymore?
It's probably not comparable at this point to be honest.
Okay, great. Thank you.
Thank you. The next
question will come from Rich Anderson with SMBC. Please go ahead.
So on the rent credit, the $1,300,000 FAD impact, that all happens in the Q1?
The majority of it, yes.
Yes. And the way it works that it's essentially your the credit totals $1,300,000 but then you recalculate the straight line and that's why the GAAP revenue is a lower impact, is that correct?
Yes, essentially for those that are on a GAAP basis, yes, are on accrual basis, yes. We have 5 pieces that are on a cash basis.
I understand. Okay, great. And then as far as the process goes, there's no change to the actual escalators, right? I know we kind of talked about it, so I want to kind of get it on record. It's just that's how you kind of came up with the rent credit, but going forward, the escalations will continue off the original
rent level?
That is correct.
Okay. Okay. Just want to make sure. The Clint, you said don't want to talk too much about coverages. It's not a reflection of current times.
And of course, I get that. But 1.13 times on skilled nursing excluding stimuluses is quite good, I would say. You should be perhaps quite proud of that relative to other numbers that I've heard. That being said, it was calculated quarter in arrears of course. So you're about 400 basis points lower occupancy.
Do you have a math at your fingertips that would say, well, for 400 basis points lower in occupancy, we were starting at 1.13, we're probably around parity now or is it not that dramatic of an impact?
We haven't done that analysis right now, Rich. But one thing that we have anecdotally heard from operators and we've seen a little bit of this in our portfolio that the skilled mix has trended up. Now that may change with cases of COVID going down. So I think it's hard to speculate as to what that what the impact would be. But we have seen that the occupancy between December January stay relatively the same and you've heard the reduced incidence of COVID cases in buildings, increased vaccinations as far as going through the 3 clinics.
So hopefully those are all positive with occupancy stabilizing.
Okay. Last question for me is, do you guys know what the employee, the healthcare worker vaccine rate is? Has there been a hesitancy? Because we've been hearing that, that the patients and the residents are accepting it, but not so much on the healthcare provider side. Are you hearing the same thing?
Do you have knowledge of what the rate is in your portfolio?
Do. Anecdotally, we've heard that occupancy data we provided in January, we for the occupancy data we provided in January, we requested information regarding the clinics and vaccination rates. So we had, for example, we had about 70% to 70% of our operators provide information about the clinics. And with our about 70% of our skilled portfolio reporting 100% of those had gone through the 1st clinic, which was encouraging, and about 55% of that reporting had gone through the 2nd clinic. But now assisted in acceptance on the staff around the resident level based on reports from our operators and the staffing was in the low 40s both for skilled and assisted.
Hopefully that picks up because that's important part of the important variable, I think. Last question, Wendy, you said you're not looking to change your underwriting metrics and it's a lot of uncertainty out there as it relates to external growth and of course that's clearly understood. But are you getting reverse inquiries at all? I wonder I'm just taking the temperature of the market as people are coming to you and saying and offering up assets that perhaps aren't interesting to you, but it would be interesting to know if there's a motivated seller pool out there that's perhaps waiting to happen eventually when we have more visibility?
We have had packages. We've looked at some packages recently that are really in the first stage of looking at them. So I think we are going to be seeing some assets coming to the market in the spring and the summer. So we're looking forward to being able to spend some of the money that Clint will be creating by selling some of the senior lifestyle assets.
Okay, great. That's all I have. Thanks very much.
Thanks, Ed. Thank you.
The next question will come from Daniel Bernstein with Capital One. Please go ahead.
Hi, good morning. Just following up, I just wanted to, I guess, go back over kind of the investment philosophy. Do you have to have do investments have to be accretive on day 1 for you to consummate those? I mean, when you think about kind of like the restructuring in the leases, the rents are set lower and then there's high in year 2, year 3 thereafter. Would you take on deals that are structured like that where you don't have a lot of return on day 1 or year 1, but you could see the upside in year 2, year 3 from a lease standpoint?
I think we look at that on a onesie twosie basis and try preferable working with existing operators, so we could put into an existing mass release And in markets where they have a presence and they understand the dynamics in the market and have a strong ability to be able to move forward. We have actually looked at a couple of deals with existing operators. Ultimately, it didn't work out, but where people have brought deals to us to try to underwrite. They got the deals got pulled off of the market, probably a function of just pricing, but we would definitely consider those on a one off basis.
Okay. But probably within more of your existing operator pool and where there is already some credit protection. Okay.
Yes.
And then just going back as well, some of the comments from your peers in terms of leading indicators, tours, not move ins yet, but tours, weeds, things like that. Have you heard from any of your operators about those leading indicators and where those trends may be heading? Anything that would give us some confidence that seniors housing occupancy could be rebounding in the second quarter or second half of this year?
I would say that it's been a little bit muted. You've seen that the Q4 was a little bit challenged. There was a with the incidence of COVID over after the holiday season, a lot of focus was on that. So I do think that operators have been very nimble and looking at virtual tours and trying to gain tractions regarding lead generation. So we have on a case by case basis, spoke with some operators that do see trending upward, others have been flat.
So it's anecdotal information in different parts of the country, It varies.
Okay. And then kind of turning back to skilled nursing, kind of the same question of how are you thinking about the census of the industry? There's been a lot of talk as to whether home health is permanently taking any market share from skilled nursing and what that might mean. Do you have any kind of view or sense of what that might look like going forward now that COVID cases are coming back down? The elective surgeries are maybe going back up.
Do you have an expectation that census will improve in skilled nursing or is that just a little bit too soon to that one?
Yes, we do have that expectation, Dan. As electives start to get scheduled here. I know a lot were put on hold during the surge, but as those start to come back, I think it's too early to say whether home health has become a more permanent solution. Certainly, there will be those higher acuity cases that it's not a permanent solution on and maybe those are some of the or majority of the electives that have been postponed because you could have a really high acuity discharge, you know it's going to be high acuity and you postpone it because you know that patient can't go to home health that they won't recover the same. They need 24 hour care.
So, I think it's too early to determine, if the discharge patterns have been permanently altered. Right now, we're the conventional wisdom is that we'll they'll trend back to normal pre COVID.
And also again with that, think of the reimbursement model through PDPM, obviously that has migrated to look at caring for more complex care for patients. So skilled should be seeing by and large just more complexity in general. I think those are probably not viable discharges going into home care.
Okay. That's all I have. Thank you.
Thank you, Dan.
The next question will come from Omotayo Okusanya with Mizuho. Please go ahead.
Yes. Good morning, everyone. So I just wanted to go back to Jordan's prior sorry, Juan's prior question around Brookdale. And could you give us a sense of again what the current rent coverage is? So at least you can kind of get a sense of if you're kind of resetting to market EBITDA on coverage ratios, if you kind of get a sense of even if they renew what the potential change in rent could be?
Tayo, this is Pam. So they have just a straight renewal option there. There's no rent reset there. They do have the option to take the rent credit that we've offered should they renew, so they would get a 50% reduction in their 2021 escalator like majority rest of our portfolio. So there's no there would be we not anticipate a change in rent
on Okay. That's actually very helpful clarification. Thank you. And then the second thing is, Wendy, I think in your opening comments, you did kind of talk about the need for further government support. And you did kind of talk a little bit about the sense of additional government regulation.
Any sense at this point what shape or form that could take even if it's nothing that's in stone yet, even kind of maybe what the lobbyists are asking for from the federal government? Any kind of insight would be helpful.
Well, we believe that there'll be a stimulus score for the senior healthcare industry and that'll come out of the 30,000,000,000 that was not allocated yet. I don't believe that the industry is looking for an addition specific allocation from the $1,900,000,000,000 However, in the $1,900,000,000,000 that is currently being discussed, there is a lot of money for the states. So depending on how the states will use that money to support their residents in the state, it might certainly help the skilled nursing industry. So I think there's a good chance relative to the $30,000,000,000 that hasn't been allocated to have some stimulus come out. And I think there's still some Level 3, Phase 3 money that hasn't been spent and is expected to be sent out later this month.
So there is probably a better opportunity to get some
of the
$30,000,000,000 than there is specifically to get from the 1,900,000,000,000
dollars Got you. That's helpful. Thank you.
Thank you. The next question will come from Todd Stender with Wells Fargo. Please go ahead.
Hi, thanks. And Clint, not to spend too much time on the Brookdale master lease, but are we talking about 4 facilities? I know you blended 4 separate leases together, but how many assets are actually in that master lease?
35 properties.
Okay, got it. And for the capital you've committed to date, are you generating a return on that capital? Are you getting the 7% right away? Or that has to get rolled into the new lease once that renews?
No, the capital commitment was made under the existing term and its current paid yield.
This concludes our question and answer session. I would like to turn the conference back over to Wendy Simpson for any closing remarks. Please go ahead, ma'am.
Thank you. Thank you all for attending and listening to our presentation. As always, if you have additional questions, please give us a call. Have a great day. Stay safe and most of you stay warm.
Thank you. Bye bye.